Washington Snapshot - November 3, 2016

November 3, 2016

Philanthropy News and Op-Eds

The Council Speaks Out on the Value of DAFs

On Thursday, October 27, the Chronicle of Philanthropy released this year’s Philanthropy 400. Of particular note is the fact that Fidelity Charitable Gift Fund moved into the number one spot on the list. Accompanying the list were a series of articles relating to the use of Donor Advised Funds.

To read the Council’s take, check out this blog post from Hadar Susskind, Vice President of Public Policy.

News from the Hill

Representative Reichert Looking to Encourage Philanthropy

Earlier this week, Tim Huber, Senior Associate for Public Policy at the Council, met with Congressman Reichert’s (R-WA) staff to discuss policy issues that impact philanthropy, the prospects for comprehensive tax reform, and the critical role that philanthropy plays in our communities. On Tuesday Rep. Reichert published an op-ed about ways the tax code could change to encourage philanthropy.

Trending in Legal Affairs

Foundation Events, Elections and Political Campaign Activity

In this week’s edition of Trending in Legal Affairs, the legal team explains foundation events, elections, and political campaign activity.

For more information on this or any other tricky legal matters, please contact the Council’s Legal Affairs Team at legal@cof.org.

Access to the Council’s legal team is a valuable member benefit. Council attorneys are available to discuss your legal questions and to provide legal information by telephone, email and through our various publications and newsletters. This information is intended for educational purposes and does not create an attorney-client relationship. The information is not a substitute for expert legal, tax or other professional advice tailored to your specific circumstances, and may not be relied upon for the purposes of avoiding any penalties that may be imposed under the Internal Revenue Code.

Happening in the States

A key Senate committee in Michigan has favorably reported a bill that seeks to clarify the law on property tax exemption and reduce the risk that foundations and nonprofits will be forced to challenge adverse decisions by local tax assessors. The legislation became necessary as multiple, conflicting interpretations of existing statutory and case law deprived organizations across the state of the exemption from property taxes that had long been recognized. Donna Murray-Brown of the Michigan Nonprofit Association testified at an October 18 hearing shortly before the committee approved the measure. Nearly 40 other nonprofits showed their support as well. The bill will likely be considered before the full Senate in the second week of November. It is unclear whether the House will take action on the bill before the end of the year-long legislative session.

Action in the States on Minimum Wage

Even before ballots are counted next month, the minimum wage is at the center of public debate across the country. Last week, the Kentucky Supreme Court ruled that cities in the Commonwealth do not have the power to set higher minimum wage rates unless the Legislature grants them such authority. At issue was a Louisville minimum wage ordinance approved in December 2014 calling for a gradual increase to $9 per hour by 2017. The Kentucky court decision mirrors action taken in North Carolina this year and Missouriin 2015 to prohibit local municipalities from enacting higher rates within their jurisdictions.

This year, numerous ballot measures seek to take the decision on raising the minimum wage out of the hands of elected officials. Arizona's Proposition 206, if adopted, would increase the state minimum wage to $12 per hour by 2020 and guarantee paid sick time. ColoradoAmendment 70 would raise the state minimum wage rate to $12 per hour by 2020. MaineQuestion 4 asks voters whether to raise the state minimum wage to $12 per hour by 2020, and adjust the rate based on fluctuations in the consumer price index. Washington State voters are considering nine statewide ballot measures, including Initiative 1433, which would increase the state minimum wage to $13.50 by 2020. Going in the opposite direction, a South Dakota ballot measure, known as Referred Law 20, would reduce the state minimum wage for workers under age 18 from $8.50 to $7.50 per hour

Declining State Revenues Leading to Spending Cuts

Many states are reeling from depressed first-quarter results for their fiscal years that started July 1, and now service and contracting cuts are on the table for immediate action. Kansas tax revenues came in nearly $50 million short of expectations in the first quarter. Missouri tax receipts grew by 3.6 percent, which – because of previous revenue shortfalls – is not enough to trigger the release of $175 million in spending frozen since July. South Dakota tax collections are coming in 1.8 percent below the same period last year. Net tax collections in Nebraska were about $25 million less than expected last month, causing the Governor to cut allotments to government agencies by one percent beginning in January.

New Mexico recently took action to close a $171 million deficit by making cuts to agency spending and by closing tax-incentive loopholes, among other things. A special legislative committee in West Virginiatasked with recommending budget cuts is reportedly considering $100 million in cuts in many areas of government spending, including for public assistance programs like Medicaid and food stamps. In neighboring Virginia, the Governor is preparing for an anticipated deficit of $1.5 billion by readying a plan to eliminate scheduled pay raises for state employees and teachers, and reportedly will ask the General Assembly to dip into the rainy-day fund to keep funding intact for education, public safety, and Medicaid. Likewise, Wyoming’s Governor is expected to tap the state’s rainy day or stabilization accounts due to revenues falling $156 million below projections. The Wyoming municipal association is calling instead for increasing sales and property taxes to help local governments address an economic slump there.